Making Enterprises, Inc. v. Marfori
G.R. No. 152239 (August 17, 2011)
Facts:
On June 4, 1984, Jose F. Marfori acquired the Marsman Building, a five-storey commercial property, from the Development Bank of the Philippines. The land on which the building was situated was owned by the Philippine Ports Authority (PPA), and Marfori entered into a lease agreement with the PPA for a period of twenty-five years, renewable for another twenty-five years. The lease stipulated that upon expiration, the building and any improvements would become the property of the PPA. Marfori invested significantly in rehabilitating the building and leased portions of it to the PPA.
On April 10, 1987, Marfori executed a dacion en pago and assignment of rights, transferring ownership of the Marsman Building to Making Enterprises, Inc. (Making), with the condition that Making would assume all of Marfori's obligations. This transaction was represented by Cristina Lee and Angelita Ma. Tamano, executives of Making. Emerenciana Marfori, Jose's wife, claimed she did not consent to this transfer, asserting that the building was part of their conjugal property acquired during their marriage. On April 12, 1994, she filed a complaint in the Regional Trial Court (RTC) of Manila against Making, the spouses Joaquin and Angelita Tamano, the spouses Lester and Cristina Lee, and the PPA, seeking recovery of ownership, annulment of the contract, damages, receivership, and a preliminary injunction.
The RTC denied Emerenciana's request for a preliminary injunction and receivership in an order dated October 18, 1995, citing a previous dismissal of a similar complaint in 1987 for improper venue. Emerenciana's motion for reconsideration was also denied. Subsequently, she filed a petition for certiorari and receivership with the Court of Appeals (CA), which was dismissed for insufficiency.
In parallel, criminal cases were initiated against Jose Marfori for estafa and violations of Batas Pambansa Blg. 22 due to dishonored checks issued to Cristina Lee. After a reinvestigation, the city prosecutor initially dismissed the complaints, but upon a motion from Angelita Tamano, the prosecutor reversed the dismissal and filed new informations against Marfori. Marfori then sought to enjoin the criminal prosecution, arguing that the checks were drawn in favor of Cristina Lee, not Making.
The RTC dismissed Marfori's petition to enjoin the criminal prosecution. Meanwhile, Emerenciana and Jose Marfori filed a consolidated petition with the Supreme Court, which was referred to the CA. The CA later granted the Marforis' petition, permanently enjoining the prosecution of Jose Marfori and appointing a receiver for the Marsman Building.
Legal Issues:
- Whether the CA erred in granting the application for the appointment of a receiver for the Marsman Building.
- Whether the CA erred in permanently enjoining the criminal prosecution of Jose Marfori.
Arguments:
Petitioners' Arguments:
- The petitioners contended that the CA's decision to appoint a receiver was erroneous as the respondents failed to demonstrate a clear right to the property or that it was in danger of being lost or materially injured.
- They argued that the criminal prosecution should not be enjoined as it was a matter of public interest and that the prosecutors acted within their discretion.
Respondents' Arguments:
- The respondents claimed that they had a legitimate interest in the Marsman Building and that the property was at risk of being lost or damaged due to the petitioners' control and alleged fraudulent actions.
- They asserted that the criminal cases against Jose Marfori lacked factual and legal justification and should be enjoined.
Court's Decision and Legal Reasoning:
The Supreme Court found that the CA erred in taking cognizance of the respondents' consolidated petition due to forum shopping, as Emerenciana had previously filed a similar petition that was still pending resolution. The Court emphasized that forum shopping occurs when a party seeks a favorable ruling in another forum after an adverse decision in one, involving the same parties, issues, and relief sought.
On the merits, the Court ruled that the appointment of a receiver was unjustified. The respondents failed to prove that the Marsman Building or its income was in danger of being lost or materially injured. The Court noted that the validity of the dacion en pago and assignment of rights was still unresolved, and until then, the contract remained valid and binding.
Regarding the criminal prosecution, the Court noted that Jose Marfori had passed away during the pendency of the case, which extinguished his criminal liability. The Court dismissed the criminal cases against him, rendering the issue of the CA's injunction moot.
Significant Legal Principles Established:
- Forum Shopping: The case underscores the prohibition against forum shopping, which occurs when a party seeks to obtain a favorable ruling in a different forum while a similar case is pending, potentially leading to conflicting judgments.
- Appointment of Receiver: The Court clarified that the appointment of a receiver is a remedy that requires clear evidence of danger to the property or fund in question, and it is not granted lightly, especially when the rights of the parties are still in dispute.
- Extinction of Criminal Liability: The death of an accused extinguishes criminal liability, and any civil liability based solely on the crime also ceases unless it arises from a separate source of obligation.